Correct Option
The correct option is 2 only
Explanation
The classification of Micro, Small, and Medium Enterprises (MSMEs) in India is governed by the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, and subsequent notifications issued by the Ministry of MSME. Under the revised criteria effective from July 1, 2020, the distinction between manufacturing and services sectors has been eliminated, and a composite criterion of investment and annual turnover is applied.
- Statement 1 is Incorrect: According to the revised definition, a 'Medium Enterprise' is defined as a unit where the investment in plant and machinery or equipment does not exceed ₹50 crore and the annual turnover does not exceed ₹250 crore. The previous threshold of ₹15 crore to ₹25 crore mentioned in the statement does not align with the current statutory limits. Even under the original 2006 Act, the investment limit for medium manufacturing enterprises was between ₹5 crore and ₹10 crore.
- Statement 2 is Correct: As per the Reserve Bank of India (RBI) guidelines on Priority Sector Lending (PSL), all bank loans to MSMEs conforming to the MSMED Act, 2006, are eligible for classification under the priority sector. This includes credit extended to micro, small, and medium enterprises for both manufacturing and service activities, aimed at ensuring adequate institutional credit flow to these critical sectors of the economy.
Key Takeaway: MSME classification is based on a composite criteria of investment and turnover (Medium: Investment ≤ ₹50cr, Turnover ≤ ₹250cr), and all such enterprises qualify for Priority Sector Lending (PSL) status.